Moody's downgrades Pemex

Moody’s Investors Service said it downgraded Petroleos Mexicanos’ (Pemex) senior unsecured ratings on the company’s notes, as well as the ratings based on Pemex’s guarantee, to A2.mx/Ba2 from Aa3.mx/Baa3.

This downgrade follows Moody’s withdrawal of Pemex’s Baa3 issuer rating and assigning a Ba2 corporate family rating to the company. The agency’s downgrade of the government of Mexico, the company’s higher liquidity and business risk triggered the downgrade, Moody’s said.

The outlook on Pemex’s ratings remains negative.

"We downgraded Pemex’s ratings and maintained the negative outlook on its ratings following the downgrade of Mexico’s rating and its negative outlook given the critical importance of the government’s financial strength and support in the assessment of Pemex’s credit risk," commented Nymia Almeida, a Moody’s senior vice president, in a press release. "The actions took in consideration our expectations for an extended period of negative free cash flow and the need for external funding, despite the company’s efforts to adjust costs and investments to low oil prices."

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